White House dropping chained CPI proposal from FY15 budget request

Feb. 19, 2014 - 06:00AM
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Rep. Allyson Schwartz, D-Pa, is one of more than 100 House members urging the admnistration to rethink a proposed change to cost-of-living calculations for retirees. / http://schwartz.house.gov/

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The Obama administration won’t seek to switch to a less generous cost-of-living gauge in its upcoming fiscal 2015 budget request, White House officials confirmed Thursday.

In his 2014 budget plan last April, Obama had recommended using the “chained Consumer Price Index” to calculate cost-of-living adjustments (COLAs) for federal retirees on a pension, as well as for military retirees, Social Security beneficiaries and other federal benefit recipients.

The administration had made the offer in hopes of attracting Republican support for a deal that combined higher taxes with cuts to entitlement programs. But GOP lawmakers “refused to even consider the possibility of raising some revenue by closing some loopholes that benefit only the wealthy and the well connected,” White House spokesman Josh Earnest told reporters at a news briefing Thursday. “So that is an unfortunate policy choice that Republicans themselves have made.”

While the chained CPI proposal remains “on the table,” he said, it will not be in the 2015 budget request scheduled for release March 4.

In proposing the shift to the chained CPI last year, the administration had said that most economists agree it is a more accurate inflation gauge than the standard CPI because it accounts for consumers' tendency to switch to cheaper items when the price of other goods rises. Over the next decade, the switch to a chained CPI would have cut projected future budget deficits by at least $230 billion, according to a White House estimate.

While many Republican lawmakers favor the switch, key Democrats and advocacy groups are staunchly opposed.

Changing to the chained CPI “would be devastating for seniors, veterans, federal retirees, disabled retirees and others,” Rep. Allyson Schwartz, D-Pa., and 116 other Democratic lawmakers said in a Wednesday letter to the White House. “For many seniors living on a fixed income, any reduction in benefits would have a serious impact on their ability to afford basic necessities.”

Applauding Thursday’s announcement was the National Active and Retired Federal Employees Association (NARFE).

“This flawed proposal should be taken off the table once and for all, and it is heartening to see the President has changed course on the chained CPI,” NARFE President Joseph Beaudoin said in a statement. “Our nation’s seniors, veterans and federal retirees should never be pawns in the budget game.”